The imminent collapse of the Chinese economy

JackRab · Aug 10, 2017

Interesting read about China's banking and credit woes, bit lengthy... but interesting.

https://www.crescat.net/crescat-capital-quarterly-investor-letter-q2-2017/

The gist...
China's over their heads in credit and shadow banking. Smart money is leaving (or has left already) overseas in purchases of real estate, companies, soccer clubs, etcetc... The less smart masses are holding the inflated bag and it will burst in the near future... Nothing new really, Crescat has been saying this for a few years now.

Slightly annoying though how it seems that in the end they push for long gold, which tends to be a thing for perma-bears...

And this part doesn't make any sense to me at all:

"We have solutions for long-only investors too. Cash and undervalued precious metals and related mining companies feature prominently."

I would say mining companies, which tend to be high capital users, wouldn't do very well when China collapses and their building drive dies...

DeltaRisk · Aug 10, 2017

JackRab said:
Interesting read about China's banking and credit woes, bit lengthy... but interesting.

https://www.crescat.net/crescat-capital-quarterly-investor-letter-q2-2017/

The gist...
China's over their heads in credit and shadow banking. Smart money is leaving (or has left already) overseas in purchases of real estate, companies, soccer clubs, etcetc... The less smart masses are holding the inflated bag and it will burst in the near future... Nothing new really, Crescat has been saying this for a few years now.

Slightly annoying though how it seems that in the end they push for long gold, which tends to be a thing for perma-bears...

And this part doesn't make any sense to me at all:

"We have solutions for long-only investors too. Cash and undervalued precious metals and related mining companies feature prominently."

I would say mining companies, which tend to be high capital users, wouldn't do very well when China collapses and their building drive dies...

There is only one caveat.
The production.

China is much like America in the early 1900's. Nouveau rich, and a controlling aristocracy.
If the production ceases the country will fold to a level somewhere between a productive society and a welfare society as they don't have the imbedded protections America has.

I would never say China would drop back below 1950's rice patty standards, but it is possible. The culture isn't what western culture is, take a visit around the non tourist destinations and you'll see that.
It's like taking a trip back to the 1900's in America.

The vast majority of the population is much like Arkansas is today. Uneducated, ignorant of politics, and very much based around their center circle(non involved and non civilized)

Btw.... I'm not leftist and I'm certainly not a democrat.

zdreg · Aug 10, 2017

DeltaRisk said:
they don't have the imbedded protections America has.

these "protections" will eventually sink the country economically.
terrorism against in the US will result in erosion of freedom, followed by suspension of the constitution and military rule.

OddTrader · Aug 10, 2017

Here is my guess.

The China economy perhaps might have already reached to a state that her internal mass domestic consumption, backed by accumulated capital assets of various forms, could be large enough to support a minimal growth of economy without much depending on external/overseas market needs.

Just 2 cents.

Martinghoul · Aug 10, 2017

It seems that they have been talking about this China blowup meme since at least 2015.

Slartibartfast · Aug 10, 2017

Martinghoul said:
It seems that they have been talking about this China blowup meme since at least 2015.

It seems to me that people start to say bullish runs have to correct soon about three years before it actually happens. No science there, just my impression of a few housing bubbles and such over the years living in various countries.

Maybe next year.

Martinghoul · Aug 10, 2017

Slartibartfast said:
It seems to me that people start to say bullish runs have to correct soon about three years before it actually happens. No science there, just my impression of a few housing bubbles and such over the years living in various countries.

Maybe next year.

This time next year, Rodney...

This reference might be a bit too old and British for y'all, but there you 'ave it.

JackRab · Aug 10, 2017

Martinghoul said:
It seems that they have been talking about this China blowup meme since at least 2015.

That's why I'm not totally convinced. Eventually they will be right, like all bears... but in the mean time they might miss a big bull market...

For now, NK would be a catalyst for either way IMO

OddTrader · Aug 11, 2017

Dec 28, 2016

Slowdown ahead for Chinese home prices, after this year's astonishing 19% price rise

https://www.globalpropertyguide.com/Asia/China/Price-History

https://tradingeconomics.com/china/housing-index

motif · Aug 11, 2017

DeltaRisk said:
There is only one caveat.
The production.

China is much like America in the early 1900's. Nouveau rich, and a controlling aristocracy.
If the production ceases the country will fold to a level somewhere between a productive society and a welfare society as they don't have the imbedded protections America has.

I would never say China would drop back below 1950's rice patty standards, but it is possible. The culture isn't what western culture is, take a visit around the non tourist destinations and you'll see that.
It's like taking a trip back to the 1900's in America.

The vast majority of the population is much like Arkansas is today. Uneducated, ignorant of politics, and very much based around their center circle(non involved and non civilized)

Btw.... I'm not leftist and I'm certainly not a democrat.

Have you ever been to Arkansas?

How much time have you actually spent there?